Closing tax loopholes would reap revenues — and political havoc

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The new mantra among lawmakers is tax reform: Let’s eliminate the unnecessary loopholes, the tax breaks, deductions, credits and carve-outs for people and businesses that probably shouldn’t have had them in the first place.

That makes for great political rhetoric, but it will be a suicidal politician who storms out of the partisan trenches to lead that particular charge.

The disturbing reality is that eliminating those collective loopholes would balance the federal budget and more. Like an overly fermented batch of Swiss cheese, the U.S. tax code is close to being more hole than cheese.

The real problem is that Congress has put so much potential revenue out of reach.

Washington Post reporter Lori Montgomery, in an impressive takeout on tax breaks, reports that last year the government reached “a rare milestone in tax collection — it has given away nearly as much as it takes in.”

The government collected $1.09 trillion in revenues last year while excusing another $1.08 trillion through deductions, credits and other perks. The projected deficit for the year ending Sept. 30 is $1.28 trillion.

In the popular mind, corporations are the villains for tax giveaways.

But according to Montgomery, business accounts for only 8 percent of those tax benefits. The overwhelming remainder goes to the middle and upper-middle classes.

Since the last serious attempt at reining in tax breaks in 1986 under President Ronald Reagan, who would be drummed out of the GOP for trying to do the same today, the number of tax breaks has doubled, patiently built up by members of Congress.

There are tax breaks for children, college tuition, retirement savings and investments, building low-income housing, buying energy-efficient appliances, working at a low-income job and living in a state with no income tax.

When Congress began capping spending in the 1980s and ’90s, tax breaks became a backdoor way of spending — the Earned Income Tax Credit or ethanol subsidies. That’s why budget experts term them tax expenditures.

All of these loopholes are ripe for pruning and rationalization. The lawmakers will talk a lot of nonsense about taxes in the coming campaign. They always do. But it would be well to remember that taxes are totally a responsibility of Congress; the tax code is exclusively a creation of Congress and so is the Internal Revenue Service.

Dale McFeatters is an editorial writer and columnist for the Scripps Howard News Service.